Are you at risk of your CPA firing you?

Many moons ago my client called me in a panic. "My CPA just fired me!" she said.

The worst part was that this happened just at the tax deadline. And she had no backup plan.

This was one of my first bookkeeping clients back in 2014. She hired me for two years in a row to reconcile her bank accounts so she could deliver her books to her CPA for her annual tax filing. My client thought this was all her CPA needed, because that's all she asked for.

Then, at the worst possible moment, her CPA let her go as a client.

True, my client was shocked. But there were some red flags along the way on my client's that indicated her relationship with her CPA was in jeopardy.

First Red Flag: My client insisted on doing her own day-to-day books despite bringing in over 6 figures in her business. As a result, her books were such a mess that she needed to keep two sets, one for invoicing and one for expenses.

Second Red Flag: She mixed her personal and business spending rather than having separate accounts for each.

Third Red Flag: She was not being compliant with her books as she needed to be.

Fourth Red Flag: She had a habit of gathering all necessary documents for taxes at the very last minute.

Now, she'd been working with this CPA for a few years, so I assumed that this was what worked for them, and didn't intervene. But I didn't know then what I know now, so I just did what my client wanted. I didn't fully understand the risks she was taking, or the repercussions of her actions (or non-actions) until it was too late.

After a few years of this process, her CPA fired her as a client without much notice, and with no solution.

(she was one of my teachers in this space of what not to do)

Turns out that this client of mine was one of my teachers in the space of "what not to do."

I also l earned a very valuable lesson that year: the customer isn't always right.

Both my client and I didn't know what we didn't know. But after that incident, I started taking more leadership with my clients. I took an active role in teaching them how to properly organize and manage their books, so this situation wouldn't happen to anyone else.

Now, it is rare that a CPA would fire you, but it does happen.

Here are some reasons your CPA might fire you:

1. You mix business and personal expenses in your business. (this is a BIG red flag)
   
2. You are always late or just at the deadline in providing tax documents (this gives a CPA a smaller window to file, which is extra stressful).
3. You are a high risk because you don't follow GAAP compliance or have proper documentation.
4. You don't want to pay increased fees when your CPA asks. (even if their work demands it).
5. They cannot handle the volume, or don't have enough staff to keep up with demand.
6. They are planning to retire. (they may sell the company, close it, hand it down to a family member, etc).
7. They want to focus on higher paying clients. (this can also be a pre-retirement plan)

Some warning signs might be:

1. They are slow to return your calls/communication
2. They often feel rushed
3. You got a letter/notification for an increase in fees
4. They are nearing retirement age
   
   

Trust me, the LAST thing you want is for your CPA to drop you right before the tax deadline. If they do, you need to quickly transition with a new accountant.

So the take-home message is this:

Having the right accountant to keep your books clean in the first place can help you avoid disasters with your CPA. Take the time to find and hire the right person for the job.